iMac Price Increase

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Comments

  • Reply 61 of 84
    barvowbarvow Posts: 64member
    Thank you, Alcimedes, for the balanced analysis. I'm not HAPPY about price increases, but some of you people are acting insane.



    After reading this and other related threads tonight, I would expect some of you to never post anything again, because Apple, and more specifically, Steve Jobs, just did some really horrible thing to you personally. If you really feel the way you say you do, you're crazy to spend all your time devoted to Apple products. Now's the time to leave it all behind. Get a life, or buy somebody else's computers and gripe about them.



    I can't believe the level of childishness and arrogance coming out of people's heads here.

    When was the last time YOU ran a company the size of Apple? Do you not think that Jobs and Company don't KNOW that this would be unpopular? That raising prices would trigger protests among the faithful (now there's a misnomer!) and turn off some potential PC crossover buyers. But saying stuff like "students want to pay $1000 for a complete system" as if that is the only thing that matters is naive. Students pay what it takes to get what they want, OR THEY DON'T GET WHAT THEY WANT! If people can't afford it, it doesn't get bought. Apple knows that and still they raised prices. It probably means that they HAD to, despite the crap it would cause them.



    Since last November my immediate family and I have bought 3 iPods, 3 iMacs and a G4 tower. We already had several Apple computers. But I suspect that we are not the only people who sunk a lot of money on newer and better computers from Apple. Do I feel betrayed by Steve tonight? Of course not. I want Apple to make money. At MY expense. It's a BUSINESS, people. I want Apple to survive. If I'm paying them for a product that I deem better than somebody else's, it's MY decision to do that. Steve never held a gun to my head. Just because some of you live on this forum doesn't mean you really have any idea what you're talking about. And saying it loudly and profanely doesn't make it anything but loud and profane.



    Since I don't believe I've stated anything here but personal opinion, I won't stay up all night to argue points of view if somebody doesn't agree. I'll be busy downloading the update to iPod and using the computer for work instead of kicking it around the room.
  • Reply 62 of 84
    agent302agent302 Posts: 974member
    Alcimedes, you are my new hero!



    People, a simple rule that my econ professor hammered in the first week of class is that, if the price of inputs increases, the supply curve shifts to the left, and prices increase at all quantities. It's the way the free market works, they can't cut margins. As a consumer, sure i'd like the iMacs to be cheaper, but as a stock holder, I want Apple to make a profit.



    Speaking of profit, this revelation doesn't seem to be too harmful thus far. AAPL was up 7¢ in after hours trading. We'll see what happens tomorrow morning.



    But everyone, just chill. How many of you complainers were actually planning on buying an iMac anyway?
  • Reply 63 of 84
    glurxglurx Posts: 1,031member
    It seems like whenever Apple has to choose between protecting their margins or increasing their market share they choose the former. IMO this is short sighted. The extra $100 is going to be the breaking point for some potential buyers and Apple will have a hard time getting them back.
  • Reply 64 of 84
    emaneman Posts: 7,204member
    [quote]Originally posted by glurx:

    <strong>It seems like whenever Apple has to choose between protecting their margins or increasing their market share they choose the former. IMO this is short sighted. The extra $100 is going to be the breaking point for some potential buyers and Apple will have a hard time getting them back.</strong><hr></blockquote>



    Exactly why this was a HORRIBLE move.
  • Reply 65 of 84
    matsumatsu Posts: 6,558member
    This hardware at a loss stuff is total crap! It is impossible that a machine as expensive as an iMac already was before the price bump didn;t have enough margin in it to weather (a slight, but mostly specious) rise in RAM and LCD costs. A bare LCD panel costs 180 (glass plus circuitry). DIMMs (256MB) are widely available at RETAIL PRICE for 60$ US. That means Apple pays 45 max. That means that the components Apple is crying about (225 total) going up by 25% has added no more than 60 dollars to Apple's cost. Considering that superdrives and Hard-drives continue to DROP in price -- DVD-rw drives have dropped about 200 canadian since december to now -- there is really no basis for the price increase. Yet even if the other components had held firm, Apple has a lot better than 60 dollars profit on a 1799 machine.



    Apple has now progressed from inventory control to DEMAND control. Congrats, IDIOTS!



    [ 03-21-2002: Message edited by: Matsu ]</p>
  • Reply 66 of 84
    satchmosatchmo Posts: 2,699member
    As I stated earlier, I don't believe it was the right thing to do. I also don't buy the fact that the iMac is made at a loss. You just don't jump into developing a $1000+ mass product computer without some margin. Try telling that strategy to shareholders!



    But, I also don't think it signals the beginning of the end for Apple either.



    And for the record, I was contemplating ordering an iMac before this price hike. I may wait it out now.

    (BTW, the price hike in Canada is $200, $150, $150 CDN dollars across the line, so it hits a bit harder.)
  • Reply 67 of 84
    pscatespscates Posts: 5,847member
    I for one am happy as a clam, being that I just bought a SuperDrive iMac (see thread in General Discussion) on Tuesday, being COMPLETELY oblivious to MW Tokyo's looming date, not to mention the notion of any price INCREASES.



    Had I known Tokyo was this week, I probably would've waited, just to make sure they didn't nudge up the MHz or something (or maybe even a slight price REDUCTION).



    But I was in an antsy, "gotta have it NOW" mood on Tuesday and made the trip to my local Apple Store and bought the SuperDrive iMac for $1799.







    Needless to say, I was quite thrilled when I woke this morning to news of $100 price hikes and NO feature/spec upgrades.



    Sometimes, it's all in the luck and the timing...



  • Reply 68 of 84
    macsrgood4umacsrgood4u Posts: 3,007member
    As has been reported all over the net the past 3 months demand for LCD screens is currently oustripping supply. It's really very simple. There is not enough capacity to make LCD screens. When that occurs prices rise. A 25 % increase for screens is just the beginning. Until there are enough manufacturing facilities to make them, the few that exist will charge more. Spoils go to the highest bidder. It has nothing to do with manufacturing more... it just can't be done. Sometime in the next month or two prices for LCD based Dell and Gateway computers will also go up. As far as memory goes, this increase was long in coming. Last year companies that make memory chips were producing them at a rate that exceeded demand. Prices started dropping. Many of those chip makers actually stopped production as they were losing money. The stock price of those companies has plummeted in recent months because of this. Now that the supply of chips is constrained, prices are going up. It happens all the time whether we like it or not.

    The bottom line: This is the way things are. Apple is not trying to stiff anybody. They have an obligation to their shareholders (who bankroll the company through stock investing) to make a decent profit. Apple needs to have higher margins then Dell. Dell sells 100 times more computers and buys components off the shelf from dozens of vendors. They cobble the computer together with the cheapest parts (like Gateway and others) and sell at very low margins. The world is 90% totally Wintel. That's a fact and it won't ever change. Apple cannot increase production to "reduce" prices. it doesn't work that way.

    A 6 to 8 percent increase in the cost of the new iMac is not that bad considering LCD prices are 25% higher since January and memory a whopping 300%.

    Steve Jobs would love not having to raise the prices. He did not do it himself. There are other execs and a board of directors at Apple who ultimately concur and ok this kind of decision.

    Life goes on. Those hardcore Apple bashers on this site are getting very boring methinks. Whinning about this is relatively unimportant. I've had my say and I bid you all a fond adieu!



    UPDATE:



    Analyst cuts Apple earnings expectations

    March 21 - 09:25 ETÂ*Â*J.P. Morgan analyst Dan Kunstler has lowered his earnings estimates for Apple's second quarter from 11 cents per shares to 6 cents per share, and has revised revenues from US$1.45 billion to $1.35 billion. "Profitability on the new machines may have come close to evaporating in the quarter," Kunstler said, citing Apple's inability to ship more quantities of the new iMac coupled with rising component costs. Shares of Apple are down more than a dollar in pre-open trading.



    [ 03-21-2002: Message edited by: MacsRGood4U ]</p>
  • Reply 69 of 84
    shadygshadyg Posts: 64member
    Another simple thing to note is that however much you believe yourself to have the pulse of the Macintosh community, I guarantee you that Apple has a better one. Yes, they've made mistakes (Cube), but overall it appears their impression of current demand for the iMac to be relatively inelastic. They know how much it costs them to build an iMac, and they know the profit on each unit sold. Whatever the slope of the demand curve, there is a point at which rising costs dictate a higher price, even if it leads to lower revenue.



    Suppose demand elasticity is very high, and a $100 price increase would cut half their units sold. Then the break-even point is a $100 profit on each unit sold. Raise the price, double per-unit profit, halve the number of units sold. Same overall profit. If the demand elasticity is low, this break-even point raises to a higher margin. People generally give Apple credit for approx. 20% margins. So for a $1300 item, cost + (cost * 0.2) = $1300. Cost = $1083, and profit = $217. In effect, it's worth it to raise the price by $100 if the slope of the demand curve is flat enough that the quantity sold is altered by q2*317 = q1*217. q2 = 0.68q1. slope = -0.32, which appears extraordinarily reasonable, especially for a customer base as loyal as Apple's.



    Of course mere break-even is not desirable long-term for reasons mentioned above. Thus it is probable that the demand curve is flatter than -0.32 to compensate for market share and revenue issues.



    -- ShadyG
  • Reply 70 of 84
    satchmosatchmo Posts: 2,699member
    I also think part of the problem is the reasoning for the price increase. Whether true or not, it smells bad. And when that happens, you get the backlash you're hearing on this forum.



    Perhaps Jobs should have come out and said,



    "We're raising the cost of the iMac by $100 because we want greater profits.

    We know it's a hot product and want to make as much as we can while we can."



    That way it's cut and dry. No B.S. , no dancing around LCD and RAM issues. While we wouldn't like it anymore, we certainly couldn't challenge Apple on it's motive.
  • Reply 71 of 84
    robertprobertp Posts: 139member
    [quote]Originally posted by satchmo:

    <strong>I also think part of the problem is the reasoning for the price increase. Whether true or not, it smells bad. And when that happens, you get the backlash you're hearing on this forum.



    Perhaps Jobs should have come out and said,



    "We're raising the cost of the iMac by $100 because we want greater profits.

    We know it's a hot product and want to make as much as we can while we can."



    That way it's cut and dry. No B.S. , no dancing around LCD and RAM issues. While we wouldn't like it anymore, we certainly couldn't challenge Apple on it's motive.</strong><hr></blockquote>



    This is a good observation, but from the standpoint of a consumer would you be more pissed off if a company said "were'r having trouble keeping up with demand due to a backlog in a sub-vendors ability to supply us with(whatever) or saying hey, we need to make our bottom line look good and we want you the consumer to pay for it? This can be a touchy subject when talking about money.
  • Reply 72 of 84
    barvowbarvow Posts: 64member
    [quote]Originally posted by satchmo:

    <strong>Perhaps Jobs should have come out and said,



    "We're raising the cost of the iMac by $100 because we want greater profits.

    We know it's a hot product and want to make as much as we can while we can."



    That way it's cut and dry. No B.S. , no dancing around LCD and RAM issues. While we wouldn't like it anymore, we certainly couldn't challenge Apple on it's motive.</strong><hr></blockquote>



    This assumes a couple of things:



    1 - that what Steve Jobs said about LCD and RAM prices is a lie, therefore any price increase is mere greed.



    2 - that if statement 1 is true and Jobs had gotten up and said "Hey, it's a hot product and we want to make as much money as we can" (which would be true about any company with a hot product) that you would somehow have been placated by his honesty. (Since you advanced that alternative as what he should have done.)



    I can just imagine the howls of protest from the people on this thread right now if that had happened: "How DARE Apple try to make money off of us! Jobs should have lied to us and told us it was because component prices went up, we probably would have swallowed that, but this is just plain WRONG!"



    I think that what is wrong is assuming that Jobs is lying about RAM and LCD's.
  • Reply 73 of 84
    rokrok Posts: 3,519member
    [quote]Originally posted by EmAn:

    <strong>



    Yeah, that's what I'm afraid of.</strong><hr></blockquote>



    well, i've been sick at home all day, unable to sleep. so i tend to have headline news on repeat in the background while i try and get work done, and the press has SEIZED on this... "apple computer raising prices." "apple computer stcok down 5% on the day" "investors fearful of this hurting sales." dammit, where were these people when apple was reporting profits against the trend of the entire tech sector, and their stok price was in the stratosphere. sigh...



    anyway, perception of reality is a strong force, folks. i don't have an opinion on the price raise (it seems okay, and if i am ignoring pc's dirt-cheap bargain basement prices to buy an imac anyway, there must be some significant reasons that i am shelling out the extra cash to begin with... so an extra $100 shouldn't be that big a deal.
  • Reply 74 of 84
    alcimedesalcimedes Posts: 5,486member
    within a week those same news shows will be talking about how other tech. companies are raising prices on their LCD lines in response to increasing costs. i wouldn't worry about it.
  • Reply 75 of 84
    patchoulipatchouli Posts: 402member
    Many of you are missing the point and the reason why so many of us think that this increase is ridiculous. You're just talking about the $100 and about Apple making money. This is about the inferior parts that they have the balls to now charge MORE for. It's not about another $100 for a cutting edge machine, it's about hiking the price on their 'supposed' low end system which quite frankly is packed with second rate and VERY dated hardware and is ALREADY over-priced. Small hard drives @5400rpm? GeForce 2? Slow RAM and system bus? Simply put Apple computers are OVERPRICED - not justly expensive.



    How in the world is Apple 'loosing money' using components that are dated? If this is the case, then perhaps their shareholders should be more concerned with the fact that Apple doesn't have a good agreement with distributors of such components and that they are getting f.ucked royally.



    Someone mentioned that RAM prices have 'rocketed' - well, not according to Crucial.Com (the makers of memory for Dell, Apple, HP and so on). Yes, prices went up - but only slightly. RAM is still dirt cheap in comparison to what it was 2 years ago. Also, LCD displays are the same price as they've always been this year over at Dell. A 15" LCD Dell display powered by Philips is $449-$499 and a 17" LCD Dell display powered by SamSung is $799.



    Apple raised the prices on the new iMac simply because of the demand. They will never be big players in the industry if they keep up this way of doing business. Dated components for a premium price with so-so warranty offers and support. Apple's 'Super Computer' is $1500 over priced when maxed out with a 17" display. Their CRT iMacs are insulting at $799 - $999 for the crap that you are getting. I know Moto has them by the balls - but how much longer will they ignore the competition?



    If they would have put in the nVIDIA GeForce3 Ti200 chip with a 7200rpm hard drive and more 'standard RAM' (considering that users can only access one chip) - then the specs just might meet their asking price (and would warrant a revision - *B*).



    NO one is expecting Apple to sell items for a loss - just put in the technology and components that warrant such a price. Don't mix words or make excuses - their prices do not match their dated offerings. If they are losing money selling last years middle range specs for this years middle range prices, then Apple is doing something very, very wrong.
  • Reply 76 of 84
    sdw2001sdw2001 Posts: 17,668member
    Oh shut up already. $100 won't make a difference. I think they did it because they are selling more than they can make. It is simple supply and demand. If you are not going to buy one than please, shut up. The thing is still awesome and reasonably priced.
  • Reply 77 of 84
    thuh freakthuh freak Posts: 2,664member
    the $100 definitely is an insignificant addition. consider the alternative: a dell, or other POS wintel. they aren't as great as a mac.



    and when your throwing a grand or two down on a computer, a hundred dollars isn't a deal-breaker. i fully expected the iPod (10 gig'r) to be at $400, but i'm still gonna toss $500 at them for it. And its not like i'm loaded. I'm a debted college student with tuition and loans.



    "and, in the end, the love you take is equal to the love you make." -j.l. & p.m.
  • Reply 78 of 84
    amorphamorph Posts: 7,112member
    [quote]Originally posted by satchmo:

    <strong>As I stated earlier, I don't believe it was the right thing to do. I also don't buy the fact that the iMac is made at a loss. You just don't jump into developing a $1000+ mass product computer without some margin. Try telling that strategy to shareholders!</strong><hr></blockquote>



    That's exactly what Fred Anderson did during the last conference call, and nobody blinked.



    He didn't say the iMac was selling at a loss, but he did say that the LCD iMac was designed to have a narrower margin than the older machines, and that, furthermore, the costs and inefficiencies involved in ramping up production would eat up what little margin there was. Then Apple went off and shipped thousands of iMacs via international air freight to catch up on orders, which cost them a pretty penny. At this point, any increase in component costs pushes the model into the red. I wouldn't be surprised if, when all's said and done, Apple has at best broken even on the iMac this quarter.



    On the other hand, the iMac should contribute to Apple's bottom line next quarter, with backorders filled and the kinks ironed out of the production line.



    [quote]<strong>But, I also don't think it signals the beginning of the end for Apple either.</strong><hr></blockquote>



    Absolutely not. I've seen people say that Apple had 125,000 orders for the iMac, and that's not true: Apple has shipped 125,000 of them, and they're still way behind. They're now cranking them out at 5,000/day, which is 150,000 per month or 450,000 per quarter, which is impressive.



    Obviously the price increase isn't good. I don't think anyone has to tell that to Apple, either. But I don't think it'll make an appreciable difference in sales. If Apple's sales projections were right, and the top seller is the SuperDrive model, then anyone who was willing to pay $1899 is probably willing to pay $1999. It's still a competitive machine for the price.



    [quote]<strong>And for the record, I was contemplating ordering an iMac before this price hike. I may wait it out now.</strong><hr></blockquote>



    To each his own. Although it makes sense for you if you were considering the low end model, given the Canadian price hikes.
  • Reply 79 of 84
    pbg4 dudepbg4 dude Posts: 1,611member
    The problem with the iMac price increase is the LCD glass shortage is a temporary setback. A large LCD glass manufacturer has been shut down because of a boron spill. This manufacturer plans to start producing again by the end of March / beginning of April. So LCD supply increases and the price of glass will fall again.
  • Reply 80 of 84
    eskimoeskimo Posts: 474member
    [quote]Originally posted by alcimedes:

    <strong>within a week those same news shows will be talking about how other tech. companies are raising prices on their LCD lines in response to increasing costs. i wouldn't worry about it.</strong><hr></blockquote>



    I'd be impressed to see any of the PC manufacturers raise their prices on LCDs. You are trying to apply traditional economic theory to an industry which doesn't follow traditional trends. Prices have only ever gone one way in the PC industry, downwards. This is driven by the continuous reduction in cost to produce the components coupled by increased functionality of components. The strong backlash by the media and analysts is for this reason. Apple is setting a precedent by increasing prices to match commodity price increases. This would be akin to GM hiking prices on their automobiles if the price of steel went up. One industry I know that recently did such a thing was UPS who charged a surcharge on shipments due to the increased price of jet fuel. I trust that Apple knows what they are doing and felt that demand for their product would justify any hike in price.
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